What’s the right time to increase your freelancing rates? 7 indicators you shouldn’t ignore
The freelancing industry is skyrocketing rapidly with a size of around 1.219 billion freelancers worldwide. As per a survey, nearly 80% of the workforce might adopt the freelancing model by 2030. Despite being a field offering flexibility, high-income potential, and convenience, not all freelancers are highly-paid.
As an independent consultant, setting your freelancing rates is not just about making money, but also about determining the quality of life you desire. Undervaluing your skillset and charging below industry standards can result in working overtime, leading to exhaustion. Conversely, arbitrarily increasing your rates may result in losing clients. To strike a balance, it is crucial to identify the appropriate timing and approach for requesting a raise in your freelance pay.
7 signs which indicate the time for a raised pay
Are you stuck in a dilemma or waiting for the right time to revise your pay? Scroll down the section below to ascertain signs that you can increase rates.
Struggling with work-life balance and income
If you find yourself constantly working excessive hours and falling short of your income goals, it’s a sign that a change may be needed. Consider revising your rates to align with industry standards and charge accordingly. Ensuring that your earnings are sufficient to meet your needs without overworking is crucial. This will not only help prevent burnout but also enable you to achieve a healthy work-life balance. However, it’s important to keep in mind that while seeking fair compensation for your hard work, the expected payout should also be reasonable for your clients.
Hefty operations costs of the business
Managing sudden increases in operational costs can be challenging, particularly if your niche requires expensive technological setups.
For example, if you are a freelance software developer, you will need to have a well-organized workstation with a high-performance laptop or computer, robust processor, ample RAM, and sufficient storage space. Leveraging technology and equipment is crucial to boost productivity and deliver high-quality results.
Therefore, it may be necessary to raise your revenue in order to offset the increased operational costs. Doing so will alleviate the financial burden and enable you to meet your financial goals while maintaining a competitive edge in the industry.
Charging lower than average market rate
Charging below the market rate may help you attract clients and projects, but it’s crucial to ensure you’re pricing your services based on the value you bring. Research and assess industry rates to position your pricing accordingly. For instance, if you’re a communications consultant in a market where the average annual salary is £40,405, aim to align your pricing with the average market rate for your role. Stay updated on market rates and connect with peers in similar roles for a comprehensive understanding.
You have become the master of your field
As a newcomer in the freelance world, it is understandable to start with nominal rates. However, as you gain substantial work experience and expertise in your niche, you can consider increasing your rates.
For example, as a product manager, your responsibilities may evolve over time, allowing you to gain expertise in various areas such as market trends, sales forecasting, marketing strategies, stakeholder communication, risk detection, and product requirements. This progression enhances your skills and gives you a competitive edge in the industry. When you reach this level of expertise, it may be prudent to consider adjusting your pricing to reflect your increased value to clients.
Your clients are satisfied with your deliverables’ quality
Consistently delivering high-quality outputs can significantly impact your pricing strategy as a freelancer
When clients are satisfied with the results you deliver, they are more likely to be willing to pay a higher price for your services. This is because they can see your growth and professionalism over time, which builds their trust in your expertise.
Impressive Client Retention Rate
Client retention is an indicator of the quality of a freelancer’s work.
It is a critical metric representing clients’ trust in the freelancer and the value of their services
Generally, the client prefers to preserve the services of those consultants who excel at what they preach. If you have been working with a client long-term, take a step ahead and ask for a pay raise.
Having a credible presence on social platforms
If your social media is loaded with resourceful content relevant to your client’s business sector, it will help you appear as a connoisseur of that niche. When you have a noticeable presence on prominent social media platforms, you can charge higher for your reputation in the market and service value from the client.
The ideal way to raise rates
When it comes to increasing your rates, it’s important to follow a professional approach. Here are two critical things to keep in mind:
- Give your clients a notice period: Avoid sudden rate increases, as it can be unprofessional. Provide your clients with a notice period of at least a month or two before implementing any changes to your pricing structure. This allows them to adjust their financial budget accordingly
- Provide a formal intimation through email: Have a conversation with your client, explaining the reason for the price hike, and send a formal email. Clearly mention the percentage increase you are seeking in your current rates. Present the rate hike as a natural advancement of your business. You can also bundle your revised prices with added benefits, as mentioned below in this freelance rate negotiation email
Subject: Update regarding the increase in the pricing structure
Respected [Client’s Name]
Hope everything is well on your end. This is to notify you regarding my updated pricing structure. As we have been associated for a long-term now, I would like to seek an increase of ____% in my current pay. However, this change would not be implemented instantaneously. Owing to the loyalty and promising professional relationship that we share, the revised prices will be effective from __________ [Date]. Therefore, you can avail the services at existing pricing for an extended duration of _________ months [specific period until the effective date].
Also, I want to reassure you that the revised prices will remain unchanged for the next complete year. Therefore, you can stay assured that there will not be any unsolicited surprises, and your financial budgetary investments will be foreseeable and safe.
If you have any questions, feel free to reach out. I look forward to hearing from you soon!
Thanks and regards,
Going this way, you are bringing optimistic news to the table instead of unwelcoming one. By drafting an email like this, one can create a perceived advantage in the client’s mind that they will get to avail of your services at existing rates for longer, which often counts as a discounted rate.
Determining a price hike that is fair for clients
While increasing your rates, you must also think from a client’s perspective. For instance, if you decide to hike your pricing structure by 50%, it is impractical and unfair to the client. Instead, you can revise the rates by 10 to 20% at a time to keep your client’s convenience in the loop. Be flexible and discuss things with your client so both of you can stay on the same page, especially for long-term clients. Below mentioned are two great ways through which you can earn a lucrative income from your clients:
- Charge premium: Rather than elevating your pricing slab, charge a premium for your services. However, you must create a unique value proposition for your clients and provide them with value-added services
- Charge higher than M.A.R.: It refers to the Minimum Acceptable Rate for a freelancer. To remain on the profitable side, charge slightly above your M.A.R. To calculate the same, apply the given formula:
M.A.R.= Living Expenses + Overhead Business Expenditure + Salary/ Annual Working Hours + Income Tax
As time passes, our personalities and skill sets evolve, and the same applies to our careers. As an independent consultant, you can initially work at a nominal rate, but as your work experience and expertise broaden, charge for the value you are providing. The ways mentioned above will help you identify the right time to revise rates while making the monetary transition smoother for your clients.